Answer

1. F

   Facts

   Annexure I compares two amounts: the extra tax caused by the arrears in the year of receipt, and the extra tax the arrears would have caused if taxed in their own years. The relief is the first minus the second, if positive.

2. P

   Provisions and law

   • Sec 89 (now Sec 157)Relief when salary or family pension is received in arrears or in advance
   • Rule 21A, Income-tax Rules 1962Manner of computing Sec 89 relief and Form 10E
3. A

   Analysis

   Step one: tax on total income including arrears in the year of receipt, minus tax on income without arrears. Step two: for each earlier year, tax on income plus that year's arrears, minus tax on income as originally assessed. Relief is step one minus the total of step two. Use the tax rates and regime that applied in each year.

4. C

   Conclusion

   1. 1Compute tax this year with and without arrears
   2. 2For each earlier year, compute tax with and without that year's arrears
   3. 3Subtract the total earlier extra tax from this year's extra tax
   4. 4Enter the figures in Annexure I

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